[Federal Register Volume 61, Number 61 (Thursday, March 28, 1996)]
[Notices]
[Pages 13909-13911]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-7503]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-37010; File No. SR-NASD-96-09]
Self-Regulatory Organizations; Notice of Filing of Proposed Rule
Change by National Association of Securities Dealers, Inc. Relating to
the Distribution of Interim Reports to Beneficial Owners and the Use of
New Technology To Communicate Such Information to Shareholders
March 21, 1996.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''), 15 U.S.C. 78s(b)(1), notice is hereby given that on March
13, 1996, the National Association of Securities Dealers, Inc.
(``NASD'' or ``Association'') filed with the Securities and Exchange
Commission (``SEC'' or ``Commission'') the proposed rule change as
described in Items I, II, and III below, which Items have been prepared
by the NASD. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
[[Page 13910]]
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The NASD is filing a proposed rule change to Part II of Schedule D
to the NASD By-Laws \1\ recommending the distribution of interim
reports to all beneficial shareholders if sent to any registered
shareholders and encouraging the use of communications technology to
make timely communications to shareholders. Below is the text of the
proposed rule change. Proposed new language is italicized; proposed
deletions are in brackets.
\1\ NASD Manual, Schedules to the By-Laws, Schedule D, Part II
(CCH) Paras. 1803-06A.
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Schedule D \2\--Part II; Qualification Requirements for NASDAQ Stock
Market Securities
Sec. 1 Qualification Requirements for Domestic and Canadian Securities
* * * * *
(d) Nasdaq issuers which distribute interim reports to shareholders
shold distribute such reports to both registered and beneficial
shareholders. Nasdaq issuers are also encouraged to consider additional
technological methods to communicate such information to shareholders
in a timely and less costly manner as such technology becomes
available.
\2\ Pursuant to a new rule numbering system for the NASD Manual
anticipated to be effective no later than May 1, 1996, Sections 1
and 2 of Part II to Schedule D that are the subject of this proposed
rule change will become Rules 4310 (regarding qualification
requirements for Nasdaq domestic and Canadian securities and Rule
4320 (regarding qualification requirements for Nasdaq Non-Canadian
foreign securities and American Depositary Receipts (``ADRs'')),
respectively. See Securities Exchange Act Release No. 36698 (January
11, 1996), 61 FR 1419 (January 19, 1996) (order approving SR-NASD-
95-51).
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Sec. 2 Qualification Requirements for non-Canadian Foreign Securities
and American Depository Receipts
* * * * *
(f) Nasdaq issuers which distribute interim reports to shareholders
should distribute such reports to both registered and beneficial
shareholders. Nasdaq issuers are also encouraged to consider additional
technological methods to communicate such information to shareholders
in a timely and less costly manner as such technology becomes
available.
* * * * *
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the NASD included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The NASD has prepared summaries, set forth in Sections
(A), (B), and (C) below, of the most significant aspects of such
statements.
(A) Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
The NASD is proposing to add new Section 1(d) to Part II of
Schedule D of the By-Laws (``Schedule D'') to recommend that Nasdaq
issuers which distribute interim reports \3\ to shareholders distribute
such reports to both registered and beneficial shareholders.\4\ The
NASD also is proposing to add the same provision as new section 2(f) of
Part II to Schedule D regarding the qualification requirements for
issuers of non-Canadian foreign securities and ADRs that are included
in The Nasdaq Stock Market.
\3\ Interim reports are reports that are voluntarily distributed
by an issuer as part of its shareholder relations activities and do
not include quarterly financial reports required to be filed with
the Commission pursuant to Sections 13(a) and 15(d) of the Act, 15
U.S.C. Secs. 78m(a), 78o(d).
\4\ The substance of this portion of the proposed rule change
has been adopted by the New York Stock Exchange and American Stock
Exchange. See NYSE Company Manual Rule 203.02 and American Stock
Exchange Company Guide Section 623.
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The NASD proposal is the product of a review by various industry
groups, including the American Society of Corporate Secretaries and the
Securities Industry Association, of listed \5\ companies' dissemination
of interim earnings reports to shareholders. The industry groups have
been attempting to achieve some uniformity among listed companies in
the handling of interim earnings reports. Presently, some listed
companies distribute interim reports to both record and beneficial
shareholders, some listed companies only send interim reports to record
shareholders, and some do not send interim reports to any shareholders.
The portion of the proposed rule change recommending that Nasdaq
issuers which distribute interim reports to shareholders distribute
such reports to both registered and beneficial shareholders is
consistent with voluntary provisions adopted by the New York Stock
Exchange and the American Stock Exchange and, therefore, would provide
the uniformity among these markets regarding the handling of listed
company interim earnings reports that was sought by the above noted
industry groups.
\5\ The securities of Nasdaq issuers are ``included in'' The
Nasdaq Stock Market, they are not ``listed on'' the Nasdaq Stock
Market. However, for purposes of this filing, the term ``listed''
will apply to Nasdaq, as well as an exchange-listed securities.
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The NASD also proposes to add language to new Sections 1(d) and
(2)(f) to Part II of Schedule D that would encourage Nasdaq issuers to
consider additional technological methods to communicate such
information to shareholders in a timely and less costly manner as such
technology becomes available. This provision is intended to encourage
further Nasdaq issuers to utilize the new technological communications
available to many but not all beneficial shareholders. This provision
of the proposal rule change, therefore, is intended to be considered by
Nasdaq issuers as a supplement to the first provision of the proposed
rule change recommending that Nasdaq issuers which distribute interim
reports to shareholders should distribute such reports to both
registered and beneficial shareholders.
The proposed rule change is a recommendation to Nasdaq issuers and
is voluntary in nature. Non-compliance with the provisions of the
proposed rule change, therefore, would not subject Nasdaq issuers to
Nasdaq actions for non-compliance with Nasdaq listing requirements. The
proposed rule change would apply to both the Nasdaq National Market and
The Nasdaq SmallCap Market tiers of The Nasdaq Stock Market.
The NASD believes that the proposed rule change is consistent with
the provisions of Section 15A(b)(6) of the Act in that the proposed
rule change is designed to prevent fraudulent and manipulative acts and
practices, to promote just and equitable principles of trade, to remove
impediments to and perfect the mechanism of a free and open market and
a national market system, and, in general to protect investors and the
public interest by, among other things, encouraging Nasdaq issuers
which distribute interim reports to shareholders to distribute such
reports to both registered and beneficial shareholders. This provision
of the proposed rule change is consistent with provisions adopted by
the New York Stock Exchange and the American Stock Exchange and,
therefore, would provide the uniformity among these markets regarding
the handling of listed company interim earnings reports that was sought
by the above-noted industry groups. The proposed rule change, in
addition, would encourage Nasdaq issuers to consider additional
technological methods to communicate the information contained in their
[[Page 13911]]
interim reports to shareholders in a timely and less costly manner, as
such technology becomes available. The NASD believes that the proposed
rule change will enhance shareholder communications in The Nasdaq Stock
Market.
(B) Self-Regulatory Organization's Statement on Burden on Competition
The NASD does not believe that the proposed rule change will result
in any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act, as amended.
(C) Self-Regulatory Organization's Statement on Comments on the
Proposed Rule Change Received from Members, Participants, or Others
Written comments were neither solicited nor received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 35 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reason for so finding or (ii) as to
which the self-regulatory organizations consents, the Commission will:
A. by order approve such proposed rule change, or
B. institute proceedings to determine whether the proposed rule
change should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing. Persons making written submissions
should file six copies thereof with the Secretary, Securities and
Exchange Commission, 450 Fifth Street, NW., Washington DC 20549. Copies
of the submission, all subsequent amendments, all written statements
with respect to the proposed rule change that are filed with the
Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for inspection and copying in the
Commission's Public Reference Room. Copies of such filing will also be
available for inspection and copying at the principal office of the
NASD. All submissions should refer to SR-NASD-96-09 and should be
submitted by April 18, 1996.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority, 17 CFR 200.30-3(a)(12).
Jonathan G. Katz,
Secretary.
[FR Doc. 96-7503 Filed 3-27-96; 8:45 am]
BILLING CODE 8010-01-M
